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Skilling started his career in Houston as an analyst for First City Bancorporation of Texas in Houston. First City was one of Enron's banks and just before it failed the first time, Skilling quit.{{Citation needed|date=April 2009}} The CEO of Collecting Bank, the FDIC's facility for managing the bad assets of First City, was Sam Segnar, the first CEO and chairman of Enron. The new First City Bank, headed by A. Robert Abboud, was also an Enron bank. Abboud was the former president of First Chicago Bank and Occidental Petroleum under Armand Hammer.{{Citation needed|date=April 2009}} First City was founded by Judge James Andersen Elkins and his law firm, Vinson & Elkins, one of Enron's lead law firms. As a consultant for [[McKinsey & Company]], Skilling worked with [[Enron]] in 1987, helping the company create a [[forward market]] in [[natural gas]]. Skilling impressed [[Kenneth Lay]] in his capacity as a consultant, and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. In 1991, he became the chairman of Enron Gas Services Co., which was a result of the merger of Enron Gas Marketing and Enron Finance Corp. Skilling was named CEO and managing director of Enron Capital & Trade Resources, which was the subsidiary responsible for energy trading and marketing. He was promoted to president and [[chief operating officer]] of Enron in 1997, second only to Lay, while remaining the head of Enron Capital & Trade Resources. In 1999, Enron launched [[EnronOnline]], an Internet-based trading operation, which was used by virtually every energy company in the U.S.
Skilling started his career in Houston as an analyst for First City Bancorporation of Texas in Houston. First City was one of Enron's banks and just before it failed the first time, Skilling quit.{{Citation needed|date=April 2009}} The CEO of Collecting Bank, the FDIC's facility for managing the bad assets of First City, was Sam Segnar, the first CEO and chairman of Enron. The new First City Bank, headed by A. Robert Abboud, was also an Enron bank. Abboud was the former president of First Chicago Bank and Occidental Petroleum under Armand Hammer.{{Citation needed|date=April 2009}} First City was founded by Judge James Andersen Elkins and his law firm, Vinson & Elkins, one of Enron's lead law firms. As a consultant for [[McKinsey & Company]], Skilling worked with [[Enron]] in 1987, helping the company create a [[forward market]] in [[natural gas]]. Skilling impressed [[Kenneth Lay]] in his capacity as a consultant, and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. In 1991, he became the chairman of Enron Gas Services Co., which was a result of the merger of Enron Gas Marketing and Enron Finance Corp. Skilling was named CEO and managing director of Enron Capital & Trade Resources, which was the subsidiary responsible for energy trading and marketing. He was promoted to president and [[chief operating officer]] of Enron in 1997, second only to Lay, while remaining the head of Enron Capital & Trade Resources. In 1999, Enron launched [[EnronOnline]], an Internet-based trading operation, which was used by virtually every energy company in the U.S.


Under Skilling, Enron adopted [[Mark-to-market accounting|mark to market]] accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value. Skilling joked about the [[California energy crisis]] at one meeting of Enron employees by asking, "What is the difference between California and the ''[[RMS Titanic|Titanic]]''? At least when the ''Titanic'' went down, the lights were on."<ref>Barrionuevo, Alexei., [http://www.iht.com/articles/2006/04/21/business/ENRON.php "Enron trial focuses on character"], ''[[New York Times]] via [[International Herald Tribune|IHT]]'', 2006-04-21, Retrieved 2007-06-27.</ref> Skilling later attributed the remark to frayed relations between Enron and California.<ref>[http://transcripts.cnn.com/TRANSCRIPTS/0202/26/se.04.html "Skilling May Still Have $66 Million Left From Stock Sales"], ''[[CNN]] live event/special'', Aired 2002-02-26, Retrieved 2007-06-27.</ref> His employees, meanwhile, plotted to keep the price of energy high in California.<ref>{{cite news |url=http://www.cbsnews.com/stories/2004/06/01/eveningnews/main620626.shtml |title=Enron Traders Caught On Tape |publisher=CBS News |accessdate=2006-12-10 | date=June 1, 2004}}</ref>
Under Skilling, Enron adopted [[Mark-to-market accounting|mark to market]] accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value. Skilling is gay
joked about the [[California energy crisis]] at one meeting of Enron employees by asking, "What is the difference between California and the ''[[RMS Titanic|Titanic]]''? At least when the ''Titanic'' went down, the lights were on."<ref>Barrionuevo, Alexei., [http://www.iht.com/articles/2006/04/21/business/ENRON.php "Enron trial focuses on character"], ''[[New York Times]] via [[International Herald Tribune|IHT]]'', 2006-04-21, Retrieved 2007-06-27.</ref> Skilling later attributed the remark to frayed relations between Enron and California.<ref>[http://transcripts.cnn.com/TRANSCRIPTS/0202/26/se.04.html "Skilling May Still Have $66 Million Left From Stock Sales"], ''[[CNN]] live event/special'', Aired 2002-02-26, Retrieved 2007-06-27.</ref> His employees, meanwhile, plotted to keep the price of energy high in California.<ref>{{cite news |url=http://www.cbsnews.com/stories/2004/06/01/eveningnews/main620626.shtml |title=Enron Traders Caught On Tape |publisher=CBS News |accessdate=2006-12-10 | date=June 1, 2004}}</ref>


Skilling began advocating a novel idea: the company didn't really need any "assets." {{Citation needed|date=June 2009}} By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.
Skilling began advocating a novel idea: the company didn't really need any "assets." {{Citation needed|date=June 2009}} By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.

Revision as of 04:50, 1 September 2011

Jeffrey Skilling
Mug shot of Skilling taken in 2004
Born (1953-11-25) November 25, 1953 (age 71)
Occupationformer president of Enron
Criminal statusIncarcerated
SpouseRebecca Carter
ChildrenThree (one deceased)
Criminal chargeconspiracy, securities fraud, false statement, insider trading
PenaltyOriginally sentenced to 24 years and 4 months and fined $45 million USD, pending re-sentencing

Jeffrey Keith "Jeff" Skilling (born November 25, 1953) is the former president of Enron Corporation, headquartered in Houston, Texas. In 2006 he was convicted of multiple federal felony charges relating to Enron's financial collapse, and is currently serving a 24-year, four-month prison sentence at the Federal Correctional Institution in Englewood, Colorado.[1][2] The Supreme Court of the United States heard arguments in the appeal of the case March 1, 2010.[3][4] On June 24, 2010, the Supreme Court vacated part of Skilling's conviction and sent the case back to the lower court for further proceedings.

Personal life

Skilling was born in Pittsburgh, Pennsylvania, and was the second of four children. He grew up in New Jersey and Aurora, Illinois. When he was 16, he worked at WLXT (channel 60), a UHF television station in Aurora.

After graduating from West Aurora High School, Skilling received his B.S. in applied science at Southern Methodist University in 1975, where he was a member of Beta Theta Pi (Kenneth Lay was also a member of the fraternity). During his admissions interview for Harvard Business School, he stated that he was asked if he was smart, to which he supposedly replied, "I'm fucking smart."[5] Skilling earned his M.B.A. from Harvard Business School in 1979. He became a consultant at McKinsey & Company in the energy and chemical consulting practices. Skilling became one of the youngest partners in the history of McKinsey.[6]

Skilling had a daughter and two sons (ages 22, 20, and 16) at the time of his conviction, from his first marriage, which ended in divorce in 1997. His youngest child, John Taylor "JT" Skilling, aged 20, was found dead in his Santa Ana, California, apartment on February 3, 2011, by what police have preliminarily determined was the result of a drug overdose.[7] In March 2002, he married Rebecca Carter, a former vice president for board communications and board secretary at Enron. Skilling is the younger brother of Tom Skilling, the chief meteorologist at CW affiliate/cable superstation WGN-TV in Chicago, Illinois.

Jeffrey Skilling was arrested on April 9, 2004, for public intoxication, during which he harassed several passersby and accused them of being undercover FBI agents. Police responding to the 911 calls found him uncooperative and concluded that he needed to sober up in the local jail.[8]

Jeffrey Skilling also currently holds the Florida state record for the largest yellowfin tuna ever caught within five miles of the Florida coast; while on a sport fishing trip in August of 2000, Skilling reeled in a 383 pound yellowfin which exceeded the previous record by 2.5 pounds.[citation needed]

Enron

Skilling started his career in Houston as an analyst for First City Bancorporation of Texas in Houston. First City was one of Enron's banks and just before it failed the first time, Skilling quit.[citation needed] The CEO of Collecting Bank, the FDIC's facility for managing the bad assets of First City, was Sam Segnar, the first CEO and chairman of Enron. The new First City Bank, headed by A. Robert Abboud, was also an Enron bank. Abboud was the former president of First Chicago Bank and Occidental Petroleum under Armand Hammer.[citation needed] First City was founded by Judge James Andersen Elkins and his law firm, Vinson & Elkins, one of Enron's lead law firms. As a consultant for McKinsey & Company, Skilling worked with Enron in 1987, helping the company create a forward market in natural gas. Skilling impressed Kenneth Lay in his capacity as a consultant, and was hired by Lay in 1990 as chairman and chief executive officer of Enron Finance Corp. In 1991, he became the chairman of Enron Gas Services Co., which was a result of the merger of Enron Gas Marketing and Enron Finance Corp. Skilling was named CEO and managing director of Enron Capital & Trade Resources, which was the subsidiary responsible for energy trading and marketing. He was promoted to president and chief operating officer of Enron in 1997, second only to Lay, while remaining the head of Enron Capital & Trade Resources. In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the U.S.

Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value. Skilling is gay

joked about the California energy crisis at one meeting of Enron employees by asking, "What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on."[9] Skilling later attributed the remark to frayed relations between Enron and California.[10] His employees, meanwhile, plotted to keep the price of energy high in California.[11]

Skilling began advocating a novel idea: the company didn't really need any "assets." [citation needed] By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.

On March 28, 2001, PBS's Frontline interviewed Skilling, where he claimed Enron was one of "the good guys."[12]

Skilling unexpectedly resigned on August 14 of that year, citing personal reasons, and he soon sold large blocks of his shares in the corporation.[13] Then-chairman Kenneth Lay, who previously served as CEO for 15 years, returned as CEO until the company declared bankruptcy in December 2001. When brought in front of congressional committees, Skilling stated that he had "no knowledge" of the complicated chain of scandal that would eventually result in Enron's bankruptcy.[14] The "no knowledge" claim has come to be known as the "Jeffrey Skilling Defense," meaning an executive who is well educated in the craft and claims he or she had no knowledge of the malfeasance or misfortune that transpired.[citation needed]

Indictment and trial

Skilling was indicted on 35 counts of fraud, insider trading, and other crimes related to the collapse of Enron. He surrendered to the Federal Bureau of Investigation on February 19, 2004, and pleaded not guilty to all charges. The indictments were primarily focused on his probable knowledge of, and likely direct involvement with, the fraudulent transactions within Enron. About a month after quitting Enron, Skilling sold almost $60 million of his stake in the company (in blocks of 10,000 to 500,000 shares), leading to the prosecutors' allegation that he sold those shares with inside information of Enron's impending bankruptcy. Skilling's lead attorney was Daniel Petrocelli, the 52-year-old civil litigator who represented Ron Goldman's father against O.J. Simpson in the negligent death civil suit successfully brought against the former football star and sports broadcaster. Skilling spent $40 million in preparation for the trial, of which at least $23 million went to his defense lawyers' retainer. Skilling's younger brother Mark is an attorney and assisted his legal team during the criminal trial.

The trial began on January 30, 2006, in Houston, despite repeated protests from defense attorneys calling for a change in venue on the grounds that "it was impossible to get a fair trial in Houston," the base of the Enron catastrophe. Skilling, known for his harsh attitude and arrogance, lost his temper on the witness stand during the trial.[15] Enron's bankruptcy, the biggest in U.S. history when it was filed in December 2001, cost 20,000 employees their jobs. In addition, many of them lost their life savings. Investors also lost billions. However, Skilling and many of the company's executives had sold huge portions of their Enron stock before the bankruptcy filing, making a substantial profit. When asked by a Dutch journalist in the street during the trial about industrial dominance, Skilling admitted that industrial dominance and abuse constitutes a global problem by saying: "Oh yes, yes sure, it does."[16] On May 25, 2006, the jury returned with the following findings regarding Skilling:[17]

In a front page interview with The Wall Street Journal on June 17, 2006, Skilling claims, among other things, that he had been in a depression after the Enron bankruptcy and considered committing suicide, but that his indictment actually lifted his spirits and brought him out of his depression; that the worst witness against him was himself; and that he will be able to survive a long prison term as long as he is given "something to do, something to accomplish" while in prison.

On October 23, 2006, Skilling was sentenced to 24 years and four months in prison, and fined $45 million. The case is currently under appeal. Skilling's request to remain free during the appeal was denied by Judge Patrick Higginbotham of the 5th U.S. Circuit Court of Appeals on December 12, 2006. In ordering Skilling's immediate imprisonment, the judge wrote, "Skilling raises no substantial question that is likely to result in the reversal of his convictions on all of the charged counts,"[18] although the order also noted "serious frailties" in the convictions.

Skilling began his sentence on December 13, 2006,[19] and is currently housed at low security federal prison in Littleton, Colorado. According to the Federal Bureau of Prisons, he is scheduled for release on February 21, 2028, when he will be 74 years old.[20]

2008 events

Prior to the trial, attorneys for Skilling requested that the notes taken from FBI agents on the interviews with Andrew Fastow be turned over to the defense. A number of inconsistencies were discovered soon after a judge ordered that the notes be turned over.[21]

On April 3, 2008, Skilling's defense attorney, Daniel M. Petrocelli, argued with government prosecutors that Skilling's trial and the conviction itself was based on honest services fraud which he said did not apply to Jeffrey Skilling. This argument was based on the idea that, even though Skilling committed illegal financial maneuvers, he did so in order to save the company and did not profit from it.[22] This in turn could lead to all of his convictions being overturned; however, the chances are very narrow.[23]

Experts believe Skilling's best chance lies in citing a parallel appeals court decision that threw out guilty verdicts on three Merrill Lynch bankers accused of helping Enron to inflate profits.[23]

On October 30, 2008, Jeffrey Skilling was moved to a low-security prison near Littleton, as his original prison, FCI Waseca, was being converted to an all-women facility.[24]

Supreme Court review

On October 13, 2009 the Supreme Court of the United States agreed to hear two questions presented by Skilling's appeal.[3] The Court subsequently scheduled[25] and heard argument March 1, 2010.[4]

The first issue planned in the argument was whether the federal "honest services" fraud statute (title 18 of the United States Code, section 1346) required the government to prove that Skilling's conduct was intended to achieve "private gain" rather than to advance the interest of his employer, and, if not, if the statute is unconstitutionally vague.[26] The Court heard two other cases about the same statute on December 8, several months before it heard Skilling's appeal: Black v. United States and Weyhrauch v. United States.[26]

The second issue — "in-house judging" — was whether, when a presumption of jury prejudice arises because of widespread community impact of defendant's alleged conduct and widespread, inflammatory pretrial publicity, the government may rebut that presumption and, if so, if the government must prove beyond a reasonable doubt that no juror was actually prejudiced.[26]

In the arguments on March 1, the issue of jury selection received the most attention. Justices Steven Breyer and Sonia Sotomayor seemed especially bothered by the questioning of one potential juror who reported that she herself lost $50,000 to $60,000 in the Enron debacle. ... 'How can we be satisfied that a fair and impartial jury was picked when the judge doesn't follow up when the witness said, "I'm a victim of this crime,"' Sotomayor asked." The government maintained that the judge and the selection process were appropriate.[4] Sri Srinivasan, a partner at O'Melveny & Myers, was Skilling's Washington defense attorney[27] and Justice Department lawyer Michael Dreeben argued for the government.[4]

On June 24, 2010, in an opinion by Justice Ruth Ginsburg, the Supreme Court unanimously nullified Skilling's honest services fraud conviction, finding that "Skilling's misconduct entailed no bribe or kickback." The Court remanded the Skilling case back to the lower court for further proceedings to sort out which charges must now be dismissed as the result of the invalidation of the honest services statute.[28]

See also

References

  1. ^ FCI Englewood.
  2. ^ Federal Bureau of Prisons. Retrieved 2010-03-01.
  3. ^ a b Sherman, Mark (October 13, 2009). "Supreme Court Will Hear Appeal of Enron's Skilling". Associated Press. Washington Post. Retrieved October 13, 2009. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  4. ^ a b c d "High Court Hears ex-Enron CEO Skilling's Appeal" by Mark Sherman, Associated Press, via yahoo.com, March 1, 2010 (ran in The New York Times March 1 or 2, 2010, p. 4 of NY ed., but no longer linked online). Yahoo link retrieved 2010-06-09; info via NYTimes link retrieved 2010-03-08.
  5. ^ Bethany McLean and Peter Elkind , Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, 2003, ISBN 1-59184-008-2.
  6. ^ "Enron: the government unveils its morality tale," Stevedenning.com, 2004-02-20, Retrieved on 2008-05-19.
  7. ^ John Taylor Skilling, Ex-Enron Chief's Son, Dies of Possible Overdose, ABC News, February 4, 2011.
  8. ^ "Feds: Tests Show Skilling Drunk During New York Scuffle".
  9. ^ Barrionuevo, Alexei., "Enron trial focuses on character", New York Times via IHT, 2006-04-21, Retrieved 2007-06-27.
  10. ^ "Skilling May Still Have $66 Million Left From Stock Sales", CNN live event/special, Aired 2002-02-26, Retrieved 2007-06-27.
  11. ^ "Enron Traders Caught On Tape". CBS News. June 1, 2004. Retrieved 2006-12-10.
  12. ^ "Blackout Program #1916 Transcript". PBS. Retrieved 2006-05-27.
  13. ^ OPPEL JR., RICHARD A. (2001-12-22). "Former Head of Enron Denies Wrongdoing". New York Times. pp. Late Edition - Final, Section C, Page 1, Column 2..
  14. ^ "Prepared Testimony of Jeffrey K. Skilling", House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations via findlaw.com, 2002-02-07, Retrieved 2007-06-27.
  15. ^ Pasha, Shaheen; Seid, Jessica (May 25, 2006). "Lay and Skilling's day of reckoning". CNN. Retrieved 2006-05-27.
  16. ^ [1]
  17. ^ Barrionuevo, Alexei (May 25, 2006). "Enron Chiefs Guilty of Fraud and Conspiracy". New York Times. Retrieved 2006-05-27.
  18. ^ Stinebaker, Joe., AP, "Skilling Expected to Go to Prison Today", ABCnews.com, 2006-12-13, Retrieved 2007-06-27.
  19. ^ Teather, David (December 13, 2006). "Skilling to report to prison". London: Guardian. Retrieved 2006-12-13.
  20. ^ Federal Bureau of Prisons - Jeffrey Skilling search.
  21. ^ Skilling Appeal Argues Secret FBI ‘Sledgehammer’ Notes Require Reversal | ABA Journal - Law News Now.
  22. ^ [2] [dead link]
  23. ^ a b Clark, Andrew (April 3, 2008). "Jailed boss seeks to reverse Enron verdict". The Guardian. London. Retrieved May 6, 2010.
  24. ^ Jeffrey Skilling has left the building, Waseca County News.
  25. ^ "Docket for 08-1394". Retrieved December 30, 2009.
  26. ^ a b c United States Law Week, vol. 78, p. 3069
  27. ^ "Next Up For The Unstoppable Sri Srinivasan: Jeff Skilling Defense" by Lauren Streib, The Business Insider Law review, Feb. 26, 2010 4:17 PM. Retrieved 2010-03-08
  28. ^ Supreme Court of the United States, Skilling vs the United States, No. 08-1394, October Term 2009.

Articles by Skilling

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